# Palo Alto Networks (PANW.US)

Canonical: https://gigainvestors.com/s/PANW

Analysis as of: 2026-10-16T07:31:02.172Z. Financial observations: FY2009–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $370.27 per share; close as of 2026-10-15.

Estimated value: low $19.03 per share, central $25.16 per share, high $28.92 per share. Buy at or below the central value $25.16 per share. Valuation as of 2026-10-16T07:31:02.172Z; scenarios are not confidence intervals.

Expected annual return: 3.4% at the stated quote. About 3.4% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 0 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 6

- Operating margin variation: 36.61×

Chart: Operating margin; fiscal year observations.

- FY2017: -0.09×

- FY2018: -0.05×

- FY2019: -0.02×

- FY2020: -0.05×

- FY2021: -0.07×

- FY2022: -0.03×

- FY2023: 0.06×

- FY2024: 0.09×

- FY2025: 0.13×

- FY2026: 0.06×

### moat: fail

- Years with nonpositive invested capital use equity plus debt and leases; positive earnings with no positive capital are shown above 100%.

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: -2.0%

- ROIC, second-lowest year: -5.8%

- Typical minus recent gross margin: 1.5 pp

- Typical gross margin (annual median): 71.9%

- Recent gross margin (lower of latest and 3-year median): 70.4%

- Years with nonpositive capital: 7

- Capital spending / revenue: 3.7%

- ROIC including acquisitions, ten-year median: -9.6%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: -10.2%

- FY2018: -2.7%

- FY2019: -1.4%

- FY2020: -3.1%

- FY2021: -5.8%

- FY2022: -3.6%

- FY2023: 7.5%

- FY2024: >100%

- FY2025: >100%

- FY2026: 9.2%

### economics: fail

- working capital as a share of revenue rose more than 10pp and ends positive

- Owner earnings / net income, 5-yr: 1.21×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $5.1B

- Net income, five-year total: $4.2B

- Return on incremental invested capital: 21.3%

- Working capital / revenue, annual change: 2.5 pp

- Working capital / revenue, change between three-year averages: 17.8 pp

- Working capital / revenue, final three-year average: 37.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 0.66×

- FY2023: 1.31×

- FY2024: 1.05×

- FY2025: 1.09×

- FY2026: 2.35×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- potential debt-funded buybacks (informational)

- ROIC first 3 years vs last 3 years: -2.7% vs 105.2%

- Per-share earnings: -0.40 to 1.60 (three-year endpoint medians)

- five-year and ten-year diluted share growth both above threshold

- material buybacks concentrated at lower earnings yields (Spearman rho below threshold)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 3.6%

- Ordinary dilution, 5-year annual growth: 5.7%

- Market cap gain: $258B

- Cumulative retained earnings: $3.6B

- Diluted shares, 10-year annual growth: 3.6%

- Diluted shares, 5-year annual growth: 5.7%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value change: $2.00

- Per-share value, starting three-year median: -$0.40

- Per-share value, ending three-year median: $1.60

- Buybacks concentrated in cheaper years (correlation): -0.85

- Average buyback yield: 1.8%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $29B

- Cumulative net income, 10 years: $3.0B

- ROIC, first three-year median: -2.7%

- ROIC, last three-year median: >100%

Chart: Earnings per share; fiscal year observations.

- FY2017: -$0.40

- FY2018: -$0.26

- FY2019: -$0.14

- FY2020: -$0.47

- FY2021: -$0.86

- FY2022: -$0.45

- FY2023: $0.64

- FY2024: $3.64

- FY2025: $1.60

- FY2026: $0.40

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -8.8%

- Receivables to sales index (DSRI): 0.92×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 39.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 14.83×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 1.06×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -31.6%

- FY2018: -20.3%

- FY2019: -17.3%

- FY2020: -14.4%

- FY2021: -19.5%

- FY2022: -18.4%

- FY2023: -16.1%

- FY2024: -3.4%

- FY2025: -11.0%

- FY2026: -8.8%

## Holders

- [Andrew Adams](https://gigainvestors.com/MPF): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Lee Ainslie](https://gigainvestors.com/mc): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 44.4% a year for ten years · sales +24.5%

Story as of 2026-10-16T09:59:21.668Z; price observation 2026-10-15.

Price needs cash profits to grow 44.4% a year for ten years

- 2025-04-14: Palo Alto Networks (NasdaqGS:PANW) Rises 10% After NHL Cybersecurity Partnership ([finance.yahoo.com](https://finance.yahoo.com/news/palo-alto-networks-nasdaqgs-panw-173313714.html))

- 2025-08-18: Cybersecurity Firm Palo Alto Pops On Strong Fiscal 2026 Guidance Amid CyberArk Deal ([finance.yahoo.com](https://finance.yahoo.com/m/a2242149-7ede-3ead-88fa-4b7b856d056e/cybersecurity-firm-palo-alto.html))

- 2025-11-19: Palo Alto Earnings Edge By Views, Guidance Underwhelms Amid $3.35 Billion Acquisition ([finance.yahoo.com](https://finance.yahoo.com/m/51d2db7a-80ad-3df0-afff-7567bf77565d/palo-alto-earnings-edge-by.html))

- 2026-02-18: Palo Alto shares fall as deal costs pile up amid AI security push ([finance.yahoo.com](https://finance.yahoo.com/news/palo-alto-shares-fall-deal-121933246.html))

- 2026-06-02: Palo Alto raises annual forecasts on strong AI cybersecurity demand, shares surge ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/palo-alto-raises-annual-forecasts-205221784.html))

- 2026-08-10: AI Adoption Is Driving Stronger Demand for Palo Alto Networks (PANW) ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/ai-adoption-driving-stronger-demand-135203323.html))

### Sales · FY2025–2026

sales +24.5%; source https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm; observed 2026-09-10.

- FY2017: $1.8B 

- FY2018: $2.3B 

- FY2019: $2.9B 

- FY2020: $3.4B 

- FY2021: $4.3B 

- FY2022: $5.5B 

- FY2023: $6.9B 

- FY2024: $8.0B 

- FY2025: $9.2B 

- FY2026: $11B 

### Gross margin · FY2026

gross margin 70.4%; source https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm; observed 2026-09-10.

- FY2017: 72.9% 

- FY2018: 71.6% 

- FY2019: 72.1% 

- FY2020: 70.7% 

- FY2021: 70.0% 

- FY2022: 68.8% 

- FY2023: 72.3% 

- FY2024: 74.3% 

- FY2025: 73.4% 

- FY2026: 70.4% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software infrastructure; annual sales are USD 11.5 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm (filed 2026-09-10); FY2026: revenue 11480000000; grossProfit 8077000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PANW.US: Palo Alto Networks, Inc. provides cybersecurity solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. It offers Prisma Access, a secure access service edge solution; Strata Cloud Manager, a network security management solution; and Prisma AIRS to protect customers' entire AI ecosystem. It provides a comprehensive cloud native application protection platform; and Code to Cloud platform, as well as offers VM-Series and CN-Series virtual firewalls for inline network security on multi- and hybrid-cloud environments. It provides security operation solutions through the Cortex platform that includes Cortex XSIAM, an AI-driven security operations platform; Cortex XDR to prevent, detect, and respond to cybersecurity attacks; and Cortex XSOAR for security orchestration, automation, and response; and Cortex Xpanse for attack surface management, as well as offers threat intelligence and advisory services under the Unit 42 name. It provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline; and threat intelligence, data loss prevention, services to resolve network disruptions, and sensitive data protection. It offers professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. The company was incorporated in 2005 and is headquartered in Santa Clara, California.

### Why customers stay

Margins ranged from 70.4% to 74.3% during 2024–26; it lost 2% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); FY2024: grossProfit / revenue = 74.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); FY2025: grossProfit / revenue = 73.4%.

- Source: https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm (filed 2026-09-10); FY2026: grossProfit / revenue = 70.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); 10-year return on capital observations [[2017,-0.10198707467102702],[2018,-0.02672315283729386],[2019,-0.014169346550409441],[2020,-0.031268103924820344],[2021,-0.057557440283667556],[2022,-0.035828869297845255],[2023,0.07482932266051408],[2024,1.0515067650676506],[2025,1.2763024526536455],[2026,0.09198737527998371]]; median -0.02044624969385165. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 5 of 10 years; bought back USD 1 billion of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); FY2023: growth capex 0; upkeep 146300000; owner earnings 575600000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); FY2024: growth capex 0; upkeep 156800000; owner earnings 2704100000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); FY2025: growth capex 0; upkeep 246200000; owner earnings 1231100000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm (filed 2026-09-10); FY2026: growth capex 0; upkeep 440000000; owner earnings 722000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); Dividend observations: [[2017,0],[2018,0],[2019,71700000],[2020,2265900000],[2021,104000000],[2022,136600000],[2023,258800000],[2024,0],[2025,0],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm (filed 2026-09-10); FY2026: cash repurchases 1000000000 USD.

### Are managers owners

Insiders own 0.8% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PANW.US SharesStats.PercentInsiders = 0.753 percentage points; cache date 2026-10-16.

### What could break it

"We rely on our channel partners to sell a substantial portion of our products" (SEC filing, Sep 2026)

- Source: https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm (filed 2026-09-10); We rely on our channel partners to sell a substantial portion of our products

### What the price says

The price assumes cash profits grow 44.4% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-10); Ten-year compound average after fade. Initial solved rate 0.647368978853123. Price 370.27; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share -0.4192650334075724 → FY2026 0.9450261780104712. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-11: $22.40 per share

- 2016-12: $20.84 per share

- 2017-01: $24.59 per share

- 2017-02: $25.32 per share

- 2017-03: $18.78 per share

- 2017-04: $18.07 per share

- 2017-05: $19.76 per share

- 2017-06: $22.30 per share

- 2017-07: $21.96 per share

- 2017-08: $22.11 per share

- 2017-09: $24.02 per share

- 2017-10: $24.53 per share

- 2017-11: $24.29 per share

- 2017-12: $24.16 per share

- 2018-01: $26.31 per share

- 2018-02: $28.90 per share

- 2018-03: $30.25 per share

- 2018-04: $32.08 per share

- 2018-05: $34.68 per share

- 2018-06: $34.24 per share

- 2018-07: $33.04 per share

- 2018-08: $38.53 per share

- 2018-09: $37.54 per share

- 2018-10: $30.51 per share

- 2018-11: $28.83 per share

- 2018-12: $31.39 per share

- 2019-01: $35.80 per share

- 2019-02: $41.04 per share

- 2019-03: $40.48 per share

- 2019-04: $41.47 per share

- 2019-05: $33.36 per share

- 2019-06: $33.96 per share

- 2019-07: $37.76 per share

- 2019-08: $33.94 per share

- 2019-09: $33.97 per share

- 2019-10: $37.90 per share

- 2019-11: $37.87 per share

- 2019-12: $38.54 per share

- 2020-01: $39.13 per share

- 2020-02: $30.77 per share

- 2020-03: $27.33 per share

- 2020-04: $32.75 per share

- 2020-05: $39.21 per share

- 2020-06: $38.28 per share

- 2020-07: $42.65 per share

- 2020-08: $42.90 per share

- 2020-09: $40.79 per share

- 2020-10: $36.87 per share

- 2020-11: $48.99 per share

- 2020-12: $59.23 per share

- 2021-01: $58.46 per share

- 2021-02: $59.72 per share

- 2021-03: $53.68 per share

- 2021-04: $58.90 per share

- 2021-05: $60.54 per share

- 2021-06: $61.84 per share

- 2021-07: $66.51 per share

- 2021-08: $76.84 per share

- 2021-09: $79.83 per share

- 2021-10: $84.85 per share

- 2021-11: $91.16 per share

- 2021-12: $92.79 per share

- 2022-01: $86.23 per share

- 2022-02: $99.04 per share

- 2022-03: $103.75 per share

- 2022-04: $93.55 per share

- 2022-05: $83.80 per share

- 2022-06: $82.32 per share

- 2022-07: $83.18 per share

- 2022-08: $92.80 per share

- 2022-09: $81.89 per share

- 2022-10: $85.79 per share

- 2022-11: $84.95 per share

- 2022-12: $69.77 per share

- 2023-01: $79.32 per share

- 2023-02: $94.18 per share

- 2023-03: $99.87 per share

- 2023-04: $91.23 per share

- 2023-05: $106.69 per share

- 2023-06: $127.75 per share

- 2023-07: $124.98 per share

- 2023-08: $121.65 per share

- 2023-09: $117.22 per share

- 2023-10: $121.51 per share

- 2023-11: $147.54 per share

- 2023-12: $147.44 per share

- 2024-01: $169.26 per share

- 2024-02: $155.27 per share

- 2024-03: $142.07 per share

- 2024-04: $145.45 per share

- 2024-05: $147.46 per share

- 2024-06: $169.51 per share

- 2024-07: $162.37 per share

- 2024-08: $181.36 per share

- 2024-09: $170.90 per share

- 2024-10: $180.16 per share

- 2024-11: $193.91 per share

- 2024-12: $181.96 per share

- 2025-01: $184.42 per share

- 2025-02: $190.43 per share

- 2025-03: $170.64 per share

- 2025-04: $186.93 per share

- 2025-05: $192.42 per share

- 2025-06: $204.64 per share

- 2025-07: $173.60 per share

- 2025-08: $190.52 per share

- 2025-09: $203.62 per share

- 2025-10: $220.24 per share

- 2025-11: $190.13 per share

- 2025-12: $184.20 per share

- 2026-01: $176.97 per share

- 2026-02: $148.92 per share

- 2026-03: $160.32 per share

- 2026-04: $179.32 per share

- 2026-05: $281.69 per share

- 2026-06: $341.02 per share

- 2026-07: $331.83 per share

- 2026-08: $382.13 per share

- 2026-09: $397.31 per share

- 2026-10: $397.03 per share

## Annual estimated value (USD per share)

- FY2025: low $18.60 per share, central $24.93 per share, high $28.61 per share

- FY2026: low $20.38 per share, central $26.93 per share, high $30.96 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1327567/000132756726000023/panw-20260731.htm); period 2026-07-31, filed 2026-09-10.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.